Publication: Eurasia Daily Monitor Volume: 5 Issue: 172

The Collective Security Treaty Organization (CSTO) has never amounted to much as an alliance which ties Russia with six post-Soviet states: Armenia, Belarus, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan. Its summit in Moscow last Friday, however, was perhaps the most important event in the 16 years of existence of this organization because the Russian leadership needed a much stronger show of support for its policy than it received a week prior from the Shanghai Cooperation Organization (Nezavisimaya gazeta, 4 September). Convincing the ambivalent allies to condemn Georgian “aggression” and praise Russia’s “peace-enforcement” efforts was easy, but making them recognize the independence of Abkhazia and South Ossetia proved to be nearly impossible.

Russia’s political needs, however, are not limited to the Caucasus. The “five-day war” has acquired a massive international resonance and triggered a sharp crisis of relations with the West. Moscow had to demonstrate that it is not slipping into self-isolation but indeed consolidating its “pole” in a new multi-polar world where the geopolitical power-play typical for the 21st-century is complicated by the existence of nuclear weapons and enriched by the complex effects of globalization (, 5 September). Conceptualization of these highly competitive international relations is lagging behind but Russia needs to establish that it is fundamentally different from the Cold War model, which it certainly would not be able to sustain (Ezhednevny zhurnal, 2 September). Hence the pronounced emphasis in the CSTO deliberations on warning NATO against its eastward expansion and on strengthening its own military “component” as a contribution to a new “security architecture” (Kommersant, 6 September).

The logic of arguing against erecting “walls” and drawing “red lines” but for closing ranks against “others” is never straight, but Moscow’s diplomacy is energized by a remarkably strong conviction that Russia, despite making risky steps in a force majeure situation, is basically on the right course. This righteousness clashes with the dominant perception in the West that Russia was turning in a wrong direction and has now gone too far in the Caucasus. Old schemes of “containment” are gaining new currency in Brussels but Moscow remains undeterred, and Medvedev announced at the special meeting of the State Council last weekend that external “political pressure” amounted in real terms to very little because “they will not be able to do anything.” Reinforcing CSTO “solidarity” with high-level networking that stretches from China to Venezuela and concentrates particularly on the Southern neighborhood (leaders of Iran, Jordan, Syria, and Turkey were engaged), Moscow seems to be bracing itself for the next round of virtual confrontation with the West.

Two key events that have opened this round are the speech of US Vice President Dick Cheney at the Ambrosetti Forum in Italy and the visit to Moscow of the European troika, including French President Nicolas Sarkozy, EU High Representative for the Common Foreign and Security Policy Javier Solana, and the European Commission President Jose Manuel Barroso. Nobody in Moscow is stunned or even impressed with Cheney’s resounding criticism, but for Putin and Medvedev, it is imperative to prove him wrong in one central point – that they cannot have it both ways: “to gather up all the benefits of commerce, consultation, and global prestige, while engaging in brute force, threats, or other forms of intimidation against sovereign, democratic countries.” Negotiations with the Europeans are crucial in this respect since it is in the trade with Europe that Russia gains those enormous benefits that sustain its outstanding growth.

Sarkozy is deeply irritated by the Russian reinterpretation and abuse of the six-point ceasefire agreement that he so skillfully put into effect during the first week of fighting, and Medvedev does not need to antagonize him further. Withdrawal of Russian troops from Poti and Zugdidi could be presented as a “good-will” gesture, and some form of international monitoring over the “security zone” beyond the borders of Abkhazia and South Ossetia might be offered as another “concession.” That might not be enough to spoil the fragile unity that has emerged in the deeply shocked EU, so some lucrative deals could be offered to those states that are perceived as Russia-friendly; Finland, for instance, might be tempted with a compromise over the issue of timber export.

Russia’s key potential allies, however, are the big European companies that have large stakes in this fast-expanding consumer market: Mercedes ships the S-class models that were planned for the US to Russia where car sales jumped by 40% in the first half of this year, Carlsberg expands on its insatiable beer market, and Danone expects strong demand for quality dairy products. Russia’s investment climate did suffer from the post-war tensions, and the “correction” on the stock market hit bottom last Friday at a level some 40% lower than the peak in May (Vedomosti, 8 September). The government is confident, however, that the fundamentals remain strong and falling inflation will calm down the traders. At the same time Moscow also is seeking measures to reassure European investors. For example, the peaceful resolution of the noisy conflict in the TNK-BP is meant to be a signal to reassure those investors (RBC Daily, 5 September). Now a new compromise on the Kovykta project could be hammered out, while new lucrative deals on developing the Caspian oil- and gas-fields in partnership with Gazprom may be offered to Italian ENI or French Total.

The guns of August so far have not caused any expansion of state interference in the economy or redistribution of resources towards national defense and military industry; to the contrary, both Medvedev and Putin are pledging to maintain the business-friendly course of “innovation” and insist that the ambitious social programs would not suffer from any Soviet-style “mobilization” (, 5 September). Indeed, every step in liberalizing domestic economic policy delivers a blow to Western readiness to punish Russia for its misbehavior. Attention-seeking politicians in Brussels might declare the end of “business-as-usual,” but the EU balancing on the brink of a potentially deep recession in fact needs “business-as-never-before.” The newly assertive Russia is firmly set to defend its “privileged interests,” but Medvedev’s interesting choice of adjective might indicate that he is ready to move on from the pointless arguments about “territorial integrity.”